tv On the Money With Maria Bartiromo NBC April 14, 2013 4:00pm-4:30pm PDT
where do stocks go next? it's not the only big we request of the week, of course. what is the impact of president obama's new budget proposal? joining me now to talk about all of that, shawn matthews, the ceo of cantor fitzgerald, and david walker's comeback america initiative founder and ceo. thank you both. it's great to be with you today. shawn, pretty hot stuff. dow, s&p 500 hitting all-time highs again this week. it just keeps wan wanting to go higher. what do you think is behind it? >> relative value based equities. you have a fixed complex where treasures are trading below 2%, and money has to find returns at this point in time. 10 certainly everyone is looking at it from the standpoint of equities on a relative value basis are cheap and they're going to continue to put their money there. we may get a cyclical nature in how the money is going to go in and out of the equity market. in general people want to put their money in equity. >> we all know this is largely being fueled by the federal reserve, right? because there are just no alternatives to stocks when people are looking for yield. so it doesn't matter that the economy is just so-so? >> well, you have balance sheets
and corporations in great shape, and revenue growth so-so, and i agree with that. but in reality where else do you put your money? people are looking at a wave of activity coming into the marketplace over the next year or so as people look to grow their revenue in alternative sources with really cheap fngs. >> i want to ask you about real estate in a minute. david, how do you see things? the federal reserve fuelling this rally do. you think the economy gets better this year? >> we're going to get slow growth. we still have an unemployment problem. the federal reserve obviously said that they may end up not doing as much stimulus by the end of this year. >> which was another headline this week. >> which is a headline, which is affecting gold prices, among other things if you will. as you mentioned, everything in the world is relative. relative with regard to investment tumults, relative with asset classes, the financial condition of the country as compared to other sovereign nation, et cetera. >> let me ask you about this sovereign nation, america's long-term debt and deficit is
something you've been working on for a long time. do you think president obama's budget proposal starts to address it? what is your take on what we heard this week from the president? >> i think the president's budget proposal was an attempt to try to put everything on the table and to bridge the house republican budget and the senate democratic budget. i don't think we're going to have a reconciliation of the budget this year. we're going to have a continuing resolution. i think sequester is with us unless and until there is a bigger grand bargain. the real question is what is the president going to do now. how is he going to get a grand bargain? i think the only way you're going to get one is if you go directly to the people in a governing style rather than campaign divisive style circumstances he up for that job? >> i don't know. we'll find out in the next 60 days. i think the next 60 days will tell us whether we're just going to muddle through or if they're going to make meaningful progress by the end of summer. >> and yet, shawn, these issues, the fact that we are spending more than we take in year after year, it's not impacting the markets at all. do you still see the kind of
conviction for stocks that you've been seeing since october? >> i think it's starting to slow down a little bit. i mean, it feels like a little bit of a blowoff phase here at the end. every day it seems like it's going up 50 to 100 points. so i think we're going to that old adage, sell in may and go away. i think you'll probably start to see the sell off a little bit, a slight pullback. >> sam has been a brilliant real estate investor, selling at the top back in 2007. he told me this week that he wants to compare the stock market of today to where the housing market was back in 2006. i want to get your take on what he said to me this week. here is sam zell. >> every single day it goes up. every day in 2006 the housing market went up. what was the number one headline every day? housing prices going up. what are you talking about every day now? new high on the stock market every day. i just think that we are
suffering through another irrational exuberance. >> is that you you see it? irrational exuberance? >> until you have a definitive change in the way the central banks are putting liquidity into the world economies, i would disagree with that. so if you look at what is going on right now, you have money looking for assets. and real estate is actually doing well in this scenario. money has to find a home. it's going into equities. >> do you think if we were to get a plan in washington to actually, you know, begin to fix the medicare and medicaid problem, the fact that these programs are running out of money and could go bankrupt, do you think that would create confidence, just knowing that there is a plan in place? >> yes. i think if we had a plan that was phased in over time, focused on getting debt as a percentage of the economy down to a reasonable level, phasing in changes to social security and medicare, doing comprehensive tax reform that provides more certainty, stability while generating more revenue, yeah, i
do think it would make a big difference. that's what we need to be focusing on. >> so the left is mad because there is too much cutting in the proposal in terms of social security and medicare, and the right is mad, basically saying we're not getting a plan to actually change these programs. and once again, it falls on the highest earners, more taxes from them. >> the left is getting mad because the president put social security and medicare on the table in a very modest way. they are out of touch with reality. these programs have serious challenges, especially medicare. the right is upset because there is more revenues. news flash, we're going to have to have more revenues, but we need to have it as part of comprehensive tax reform, and it needs to be coupled with social insurance reforms. >> what are you advising clients to do right now? >> i think people still have to look for putting money to work in the equity market at this point in time. >> because of the lack of yield anywhere else. gentlemen, great conversation. we so appreciate your time tonight. >> thank you. >> thank you so much, david walker and shawn matthews. christine lagarde had a surprise warning about the state
of europe's economy. and she mentioned two countries that she said to pose real risk to the global economy. i spoke to the managing director of the imf this week about the global economy, the fed and the world economy, all part of this week's conversation. >> the one group of countries, the emerging market economies and developing countries are doing quite well. then you have the second group, the second speed recovery, if you will. countries that are on the mend. and i will include in that group the united states of america. then you have the third group, the third speed recovery where countries still have a lot to do. and in that category you find the eurozone in particular and japan. >> today we're hearing all different commentary about when the federal reserve should ease back on its stimulus. do you think there are damages to this plan longer term? >> first of all, i would observe that the fed has indicated that they would do so with two compasses, if you will, one inflation and they're keeping a
very attentive eye to inflation. and second, employment. what we fear at the moment is inflation under control. as long as that is the case, and given that the fiscal tool is not available at the moment, then the monetary policy should continue as it does. >> in your speech you said italy and france may pose grave risks to the eurozone. >> well, these two countries are very large players in the eurozone. and they have undertaken some structural reforms, both of them. they are dealing with a degree of fiscal consolidation. but in our view, in terms of structural reforms, more needs to be done. >> my thanks to christine lagarde. up next "on the money" and playing by the rules. what do car emissions, health care, and financial reform have in common? they all pass through the office of my next guest, the former
regulatory czar for the obama administration. cass sunstein is with me. he says rules can make life simpler. and are travelers abandoning ships? cruise ships. how the travel season is shaping up to the floating hotels as we take a look at how the stock market ended the week. enough about the book, i want to hear about your date.
the opportunity to swap a higher calorie snack for a delicious 90 calorie yoplait light. ♪ sorry... about your date, the details of your date. [ female announcer ] just one swap a day helps keep the calories away. yoplait. it is so good. do smart rules make for better government? my next guest led a unit of the white house office of management and budget that reviews every regulation proposed by the executive branch. the office of information and regulatory affairs, what he calls the cockpit of the regulatory state. cass sunstein is with me, a professor at harvard law school and author of "simpler, the future of government." great to have you on the program. thank you so much for joining
us. as head of oira, no significant rule could be issued by any cabinet or department without going through you. that means fuel efficient circumstances standards, changes to the food pyramid. tell me about that rule. >> this was an idea that president reagan actually had in the early '80s. the idea is that rules are often very expensive. they sometimes can protect public health and welfare, safety, the environment. they sometimes can hurt the economy. they can hurt businesses large and small. and the reagan idea which president obama has embraced, there should be an office that carefully scrutinizes the rules to make sure they're basically consistent with law and sensible. >> now business today is always talking about what is on the horizon in the regulatory environment. you know, and in the book, you write that the obama administration approves fewer new regulations in the first term than the bush white house has. but new regulations since 2009 makes some fairly significant changes. so even though there by mai be fewer of them, are they even more far-reaching? >> well, i think the best measure of reach if we're talking in business terms is
cost. and the most costly year for regulation in the last ten was 2007. >> that was but of tarp, right? >> it was because of air pollution rules. >> oh, wow. >> so if you look at the bush administration regulatory record, not only were there more than obama, but the highest cost year was higher than any year under the obama administration. >> so let me ask you about the health care reform. what role did your office take in reviewing the rules for the affordable care act? >> well, my office had as a standardly does a rule in overseeing those rules so that they're issued only once they pass through the scrutiny my office provides, and i was one of the team of people within the white house and other parts of the executive branch that tried to work hard to make the rules that were issued were legal and sensible. >> okay. and what do you say to those who say, look, this is the reason companies are sitting on cash. i mean there is something like $3.6 trillion on balance sheets right now from corporate america. they say we're sitting on the money. we're not going to use it to create jobs and hire people because too many rules, like
health care, impact the efficiency of my business and this is strangling growth. >> well, there is a question of how to make the rules as good as possible. and if they're rules that are coming that people are nervous about, to work with the federal government, to make them less a source of nervousness is extremely important, and that's ongoing. i don't think the economists believe that regulatory fear is the principle cost -- the principle source of economic difficulty now. but it is correct to say that to keep the costs under control and to insure simplicity and clarity is a primary imperative for the next years. >> what is your take on dodd/frank? i guess the banks are reporting earnings right now. and i thought it was really interesting. all the analyst reports that i'm looking at have far less to do with earnings and far more to do with the regulatory environment. do you expect that we are going to see spin-offs from businesses, the big bank that got a spin-off their investment business because dodd/frank financial reform do you think? >> i don't think so. >> you don't see -- >> not expecting that. the future is hard to predict.
but we have to keep in mind the impetus for dodd/frank, which is we had a terrible financial crisis from which we're still trying to recover. and the principle goal of dodd/frank is to make sure we reduce systemic risk. >> some of the hundreds of rules have not been implemented yet. why is that? why is this particular legislation taking long to actually take effect? >> there are a few different challenges. one is there are a lot of agencies involved in issuing some of the rules. and they have to coordinate with one another. and that's important goal. the other is that to do careful analysis of cost and benefits is something that some of the agencies have been focused on and some courts have been focused on. that takes some time too. and a third point, which is kind of the good side of delay, which does have some bad sides is that people in government are paying alot of attention to public comments. so if there is a rule proposed and the private sector, not only businesses, but public interest groups come in and said look, what you proposed doesn't make a
lot of sense. it has big problems with it and here is how to fix them, then those comments need to be carefully attended to. >> do you think too big to fail guess away? >> well, i think one thing that should go away is the risk, the failure of one bank or one economic actor will have proliferating, cascading effects through the system. and the primary impetus behind a lot of the dodd/frank legislation is to ensure against those cascading effects. >> good to have you on the program. >> cass. >> thank you. >> best of luck on the book. cass sunstein joining us. up next "on the money," cruise horror stories. can the industry recover from the bad press? and does that mean you can get a bargain on your next [ wind howling ]
a true nightmare on the high seas. an engine room fire on the carnival triumph resulted in more than 3,000 passengers stranded for days in the gulf of mexico. two months ago. and yet this isn't the only cruise horror story we've seen this year. with the summer travel season here and people too scared to take vacations on the high seas, can you find bargains if you look hard enough? joining me now is "travel & leisure's" international add or the mark orwoll. mark, it's good to have you on the program. >> thanks, maria. >> as always, thank you so much. so what is your sense of how travelers are feeling about taking a cruise right now after all of these horror stories? are they less likely to go on a cruise after the triumph? >> well, a lot of people are afraid about the safety issues on cruising in general right now
there is a recent harris poll that measures trust in various industries. in this case, they did a poll on the cruise industry, said that the trust level among the american public has dropped by 17% in the weeks following the triumph disaster. but you have, on the other hand, passengers, people who have traveled on the cruise once, twice, or many, many times, and they look at this more as a one off. >> so have these events impacted the industry? are sales down? >> well, the actual number of sales for carnival, mickey arison said they were down in the double-digits, but that they rebounded quickly after that. generally speaking, travel agents are saying that cruise sales, the number of people buying cruises hasn't really dropped. >> i don't know if i want to stick my neck out and say hey, maybe i'll go on a cruise because it's a bargain. but carnival has a lot of deals right now. >> oh, my gosh. >> we actually found a cruise to the bahamas, sounds pretty good in the rainy weather today. we found a cruise to the bahamas
costing $46 a night. >> yes. >> for five night. >> i know. >> are these deals too good to be true? >> yeah. some wag on the internet said yeah, it's cheaper than a motel 6 stay. but, in fact, if you add in the fees and you add in the port tax, it comes out to more like $75 a day. >> not bad. >> carnival is discounting like crazy. the average prices have dropped by about 8.9% since the triumph situation. the cruise industry in general prices are down -- you know, they've decreased about 2.1%. but some cruise lines are actually raising the prices right now. ncl, royal caribbean, they have raised the prices about 7%. >> so they're trying to gain on their competitor's upset. >> i think that's definitely what is happening, yeah. >> so what is happening next? have there been cries for more regulation and oversight of this industry? can this industry have oversight? >> the government actually does regulate the cruise industry to a great extent. every cruise ship that comes into our ports in the u.s., they are inspected for health and safety issues by the u.s. coast
guard. senator chuck schumer of new york is proposing a cruise passenger bill of rights, which would allow people to get a full refund and get off of a ship if it's disabled. senator jay rockefeller of west virginia has actually sent a letter to carnival suggesting that they may want to repay the federal government for the navy and coast guard's efforts to bring the disabled triumph back to port. carnival says i don't think so. >> i can see that. good to have you on the program. >> thanks, maria. >> thank you so much for joining us. up next, a look at the news this upcoming week that will have an impact on your ney. and talk about state-of-the-art. a billion dollars of it, all being given way. picture that.
for more on our show and our guests, check out our website, otm.cnbc.com. and i hope you'll follow me on twitter and on google. plus look for @mariabartiromo. first, a look at the stories coming up in the week ahead that may move the markets and impact your money this week. more earnings news. we'll hear from citigroup, bank of america, goldman sachs, american express, and morgan stanley. the group may very well set the tone for trading. other companies on deck, coca-cola, google, johnson & johnson, and ebay with their first quarter earnings. tax day is upon us. monday is the deadline for millions of americans to file their income taxes for 2012. tuesday march's consumer price index will be out.
the cpi tracks the price change for household goods and services. on wednesday, britain will hold a state funeral for former prime minister margaret thatcher. and finally today, hang this on the wall. leonard lauder, son of estee lauder gave a gift to new york's metropolitan museum of art. picasso from the early 20th sent acubist period is one of the largest philanthropic donations in history. it will significantly impact the met's standing as the foremost chronicler of modern art. the museum will launch a special exhibition from lauder's donation in 2014. that will do it for us today. thank you so much for joining me. next week, what the headline about the future of the news business? how digital consumers could stop the presses. each week keep it rite [ horn honks ] ♪
>> this is "the chris matthews show." >> ask not what your country can you.r >> tear down this wall. >> i can hear you. come. time for change has chris: spring forward, cold in the ground too long. bud andngton ready to flourish? is there hope for immigration reform, even for a deal to close government's deficits and manage the debt. obama's gamble, he put social
table beforehe getting anything from the republicans. could his profile encourage, give onhe other side to taxes? will ticking off his own base him to the center, make him the country's one great figure who wants to deal and enemy?, who's our we can find dangerous governments on two sides of the world. today, we ask reporter who is cover the c.i.a. for the low-down. in charge in north korea? and iran, who and what should we be afraid of and do our spies really know? i'm chris matthews and welcome to the show. us today, david ignatius post,"he washington kelly o'donnell with nbc news, nia-malika henderson with "the washington post" and mark mazzetti with "the new york times." it with ours had long winter of washington gridlock so you're seeing checks andls on gun immigration and even if they only last as long as the cherry gunsoms, the bargains on checks and immigration are a boom to the president's hopes legacy.cond term
the biggest move this week was toma's gamble, offering cuts social security, the most district bid from either side for a bargain that would create and boost the middle class, a huge achievement. hisade it clear this is second-term priority. here he is after winning in november. i don't presume that because i won an election that everybody suddenly agrees with me on everything. i've got one mandate. i've got a mandate to help class families and families working hard to get into middle class. chris: he did it this week. been watching the ping pong game but he says i'm going to serve, you guys react. bold. >> it's very bold. i heard president obama saying quote lyndon johnson, what the hell's the presidency for if not to lead finally obama came out for this waiting for republicans to make